Council committee approves new rules for ride-sharing services

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July 9, 2014 // UPDATED 1:29 pm - July 11, 2014
By: Ben Johnson
Ben Johnson

A City Council committee passed the state’s first regulatory framework for app-based ride services like UberX and Lyft on Tuesday, clearing the way for final city approval at the full Council meeting July 18.

Called Transportation Network Companies, or TNCs, the new tech companies allow anyone with a smart phone and a credit card to order a ride through an app on their phone. UberX and Lyft both started operating unregulated in Minneapolis this winter, and since then city staff has been rushing to put together rules to govern the new industry.

The taxi industry has pushed for TNCs to operate under the same rules it does, arguing TNCs provide essentially the same service, so anything other than the duplicate regulations create an unfair playing field. Third Ward City Council Member Jacob Frey, who took the lead in authoring a new ordinance governing TNCs, disagrees.

“Taxis are by their very nature public-facing. The driver doesn’t know the rider, the rider doesn’t know the driver. Taxi cabs are able to scout for passengers, they’re able to get hailed,” he said. “TNCs on the other hand are private-facing. You sign up ahead of time, you give your information ahead of time, the driver knows the rider, the rider knows the driver, and you have the ability to say no if the pricing is too high.”

If the new ordinance passes TNCs will have to pay $35,000 annually to the city and up to $10,000 in fees if they do not offer handicap-accessible vehicles, which would go toward creating a fleet of vehicles to meet the needs of handicapped citizens.

The taxi industry wanted TNC drivers to pay for commercial drivers insurance like cab drivers are required to do, but instead city staff accepted company-provided insurance. Under the new ordinance, TNCs will have to provide up to $1 million in liability insurance when a driver is transporting passengers, and between $30,000 and $100,000 when a driver is logged on to the digital network looking for passengers.

Frey’s new TNC ordinance was paired with a series of deregulatory measures for the taxi industry sponsored by Ward 6 City Council Member Abdi Warsame.

Under the revised taxi cab rules, cab drivers would no longer have to carry a safe, physical map, fire extinguisher, Department of Transportation medical card, emergency triangles, fill out trip sheets or pay $200 for a downtown cab stand permit. Drivers would also be allowed to park in residential areas and be able to use their cabs for personal use, which are both currently illegal.

Cab companies would no longer be required to go through the government for driver training and vehicle inspection, maintain a physical dispatch office or advertise in the yellow and white pages. The number of cabs required to start a taxi service would be reduced from 15 to five, and a complex annual fare adjustment formula mandated by the city would be scrapped.

“I believe that the taxi cab industry is overregulated and that the market is saturated, and with the entrance of the TNCs I saw an opportunity to deregulate some of the issues taxi cab drivers were facing,” said Warsame. “This work was collaborative, but no one is going to be satisfied 100 percent.”